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Market Update

Early Bounce Evaporates On Wall Street

Barry Adams
14 Jun, 2022
New York City

On Wall Street early stock bounce evaporated after steep loses on Monday and market indexes extended losses.

The S&P 500 index increased 0.3% to 3,761.62 and the Nasdaq Composite index added 0.24% to 10,835.23.

Traders are revising interest rate expectations to 75-basis-points from 50-basis-points after the Fed meeting tomorrow after the wholesale price index rose 10.8% and hovered near record level.

The yield on 10-year Treasury notes inched slightly lower to 3.348%.

Futures of crude oil edged up $2.50 to $123.45 a barrel and natural gas edged down $1.46 or 17% to $7.14 a unit.

With elevated inflation measures, the Federal Reserve is lagging in its response in tackling inflation that is hovering above its target range above 2% for months.

Investors are worried that the Fed may be forced to take drastic actions to tame inflation forces and dip the economy into a recession and shrink corporate profits.

Market indexes are rebounding from steep losses on Monday when the S&P 500 index dropped 3.9% and the Nasdaq Composite index declined 4.7% ahead of the interest rate decision on Wednesday.

The dramatic declines came on top of similar losses in the last two days in the previous week after the U.S. inflation accelerated in May to the fastest pace of 8.6% since December 1981.

The S&P 500 index dipped to bear market with losses of 21.76% from the high in January and the Nasdaq index extended losses to 31.8% in the year so far.

Oracle jumped 9.9% to $70.35 after the database maker reported higher-than-expected earnings.

Revenues in fiscal fourth quarter ending on May 31st rose 5% to $11.8 billion and net income dropped 21% to $3.2 billion.

diluted earnings per share declined to $1.16 from $1.37 a year ago.

Coinbase Global declined 4.5% to $49.75 after the cryptocurrency exchange in an internal memo announced 18% staff reduction. The company has about 5,000 employees.

Coinbase stock has plunged 85% from its peak and dropped 80% this year and bitcoin declined to $22,000, extending this year's losses to 53%.

FedEx jumped 12.5% to $226.01 after the package delivery company lifted its quarterly dividend 50% to $1.15 a share.

The package delivery company added two directors and expanded the board as a part of agreement with hedge fund D.E Shaw.

European markets traded up but near the close the indexes started wavering and closed down.

The DAX index decreased 0.5% to 13,364.60, the CAC-40 index declined 0.7% to 5,981.72, and the FTSE 100 index fell 0.05% to 7,201.67.

German consumer prices increased 7.9% in May from 7.4% in April, the final data from Destatis showed.

The data were revised from the flash estimate released on May 30.

Cautious Trading in Asia On Elevated Energy Prices

Arjun Pandit
14 Jun, 2022
New York City

Asian markets were on the defensive on the growing worries of global economic slowdown, rising energy prices, and extended lockdowns in China.

The Nikkei index fell 1.3% to 26,692.86, the Hang Seng Index closed nearly unchanged at 21,067.99, and the Sensex index edged lower 0.3% to 52,693.57.

Investors were on the edge after market indexes extended losses in New York for a third day in a row.

The S&P 500 index dropped 3.9% and the Nasdaq Composite index declined 4.7% ahead of the interest rate decision on Wednesday.

The dramatic declines came on top of similar losses in the last two days in the previous week after the U.S. inflation accelerated in May to the fastest pace of 8.6% since December 1981.

The Nikkei index dropped as much as 2.2% before recovering in the afternoon on the worries of inflation.

The index declined for the third day in a row as crude oil prices stayed firm near $123 a barrel price level in international markets.

Japan, one of the largest importers of crude oil in the world, is battling energy price inflation that is slowly sipping in the broader economy after decades of deflations.

The broader Topix index declined 1.2% led by losses in tech, healthcare and real estate companies.

Softbank Group fell 2.6% to 5,033 yen.

Automakers fell on the persistent supply chain disruption worries. Toyota Motors declined 1.7% to 2,095 yen, Nissan Motor fell 1% to 539.20 yen, and Honda Motor dropped 0.2% to 3,287 yen.

The indexes in Shanghai and Hong Kong opened higher but trimmed gains on the worries that the lockdowns in Shanghai and Beijing may be expanded to more regions and extended again.

The Kospi average dropped 0.46% to 2,492.97 on the rate hike worries in Korea.

LG Energy Solution rose 2.8% after the company announced a new battery manufacturing plant in South Korea. The 4680 battery cells made by LG are used by Tesla in its electric vehicles.

Mumbai stocks struggled to rise above the weak sentiment in global markets and wholesale inflation surged to a record high in a decade.

The Sensex index declined 153.13 or 0.3% to 52,693.57 and the Nifty index dropped 42.30 or 0.27% to 15,732.10.

India's wholesale inflation accelerated to 15.88% in May from 13.11% in April, according to the latest data released by the Ministry of Commerce & Industry.

The latest bout of inflation was driven by rising prices in petroleum products, chemicals, and food and no-food items.

The index is at a record high since the current data series began in 2011.

Adani Enterprises jumped 5.6% to 2,197.60 rupees after the company agreed to sell a 25% minority stake in its subsidiary Adani New Industries to France-based TotalEnergies.

New Industries plans to build green hydrogen production and ecosystem with the aim of investing $50 billion over the next 10 years.

The Australian market index ASX 200 fell 3.55% to 6,686.58 after a day of holiday and catching up with market losses around the world on Monday.

The mining companies BHP Group fell 4.2% to $44.26, Rio Tinto declined 4.2% to $111.50, and Fortescue plunged 8.5% to $19.63 after iron ore prices eased.

Rate Fears On Wall Street Sank S&P 500 and Nasdaq 4%

Barry Adams
13 Jun, 2022
New York City

On Wall Street fear ruled and investors sold stocks deepening market selloff.

Market indexes plunged after investors increasingly focused on the yawning gap between the current interest rates at 1% and inflation nearing 9%.

The gap between the interest rate and inflation is so wide that investors fear only drastic Fed actions will tame inflation running above the Fed's target range of 2% and showing no signs of cooling.

The Fed's plan to lift rates is a blunt instrument with wider ramifications for the economy and may lead to unintended consequences.

Tougher Fed actions, higher rates faster, will not only slow down the economy but also lift jobless rates and reduce the value of future profits.

The stock markets around the world turned lower on the prospects of elevated inflation for many more months and larger rate hikes in the U.S. and Europe.

In addition, crude oil prices are showing no signs of softening despite trading near 8-year highs despite the prospects of slowing economies.

This week, central banks around the world are going to announce their rate decisions.

The rate decisions are expected from the U..S. Federal Reserve and the Banco Central Do Brasil on Wednesday, from the Bank of England on Thursday, and from the Bank of Japan and Swiss National Bank on Friday.

The S&P 500 closed down 3.9% to 3,749.62 and the Nasdaq Composite index plunged 4.7% to 10,809.23.

Only five stocks closed higher in the S&P 500 index.

In the year so far, the S&P 500 extended losses to 21.8% and the Nasdaq Composite fell deeper in the bear market with a loss of 31.7%.

Bitcoin dropped 15% and extended two-month losses above 50%.

Travel and leisure stocks led the losers.

American Express plunged 5.2%, American Airlines declined 9.5%, Delta Air dropped 8.3%, Hyatt Hotels plunged 7.01%, and Expedia Group decreased 7.7%.

Large losses in trading today did not spare large tech companies.

Microsoft Corp declined 4.2%, Apple Inc lost 3.8%, Alphabet plunged 4.1%, and Meta Platforms decreased 6.5%.

European markets closed at their lows of the day tracking losses on Wall Street.

The DAX index dropped 2.4% to 13,427.03, the CAC-40 index declined 2.7% to 6,022.32, and the FTSE100 index fell 1.5% to 7,205.81.

Futures of crude oil declined 41 cents to $120.22 and natural gas fell 18 cents to $8.67 a unit.

The yield on 10-year Treasury notes rose 24 basis points to 3.389%, highest since 2011.

Asian market plunged after the U.S. inflation accelerated and fueling worries of faster rate hikes.

The yen dropped to a 23-year low on widening rate gap between Japan and the U.S.

Indexes in China declined after Beijing reimposed stricter controls in several parts of the city.

The Nikkei index plunged 3.01% to 26,987.44, the Hang Seng index declined 3.4% to 21,067.58, and the Kospi index dropped 3.5% to 2,504.51, a 19-month low.

Market indexes in Frankfurt and Paris dropped 2% and in London declined 1.7%.

The Sensex index dropped 1,456.74 or 2.7% to 52,846.70 and the Nifty 50 index plunged 2.6% or 427.40 to 15,774.40.

The Australian markets were closed for a holiday and the New Zealand index dropped 1.9%, the largest one-day decline in four months and fell to its lowest level in two years.

The Japanese government 10-year bonds yield rose to 0.255%, a six-year high and above the cap set by the central bank, ahead of the interest rate decision by the Bank of Japan on Friday.

Movers: Astra Space, Caesars, Coinbase, DocuSign, McDonald's, Prologis, Zendesk

Barry Adams
13 Jun, 2022
New York City

Astra Space Inc dropped 24.01% to $1.54 after the company rocket this weekend failed to reach orbit carrying NASA's satellites.

Caesars Entertainment plunged 12.1% to $39.99 and traded at a new 52-week and one-year low.

Coinbase Global plunged 21.4% to $46.24 after the continued weakness in the largest cryptocurrency bitcoin.

Bitcoin declined for the 12 weeks in a row from its high near $49,000 in March to $23,000.

The large bitcoin holder MicroStrategy Inc plunged 19.8% to $163.23 following the bitcoin fall.

DocuSign Inc dropped 10.2% to $59.97 on top of 24% losses on Friday after the company missed earnings expectations. Wolfe Research also lowered its rating to "market perform" from "peer perform."

McDonald's Corp increased 0.7% to $239.14 after the company's Russian operations opened under a new Russian ownership on Russia Day this weekend.

Alexander Govor, the Siberian entrepreneur, said he paid a token purchase price for McDonald's Russia operations and the U.S. fast food giant has no plans to return to Russia.

Prologis Inc declined 8.1% to $107.79 after the industrial real estate developer and operator agreed to acquire Duke Realty for $26 billion in an all-cash transaction.

Under the agreement Duke shareholders will receive 0.475 shares of Prologis shares.

Duke Realty jumped 0.7% to $50.73.

Revlon Inc plunged 42% to $1.17 after a Wall Street Journal report without citing sources said that the cosmetic company is facing financial issues and supply chain disruptions and the management is preparing to file for bankruptcy protection as early as this week.

Today's market decline was led by losses in tech stocks.

Alphabet Inc dropped 3%, Amazon.com Inc dropped 5.2% and traded only 10% above its pre-pandemic level, Apple Inc fell 2.5%, Adobe declined 3.7%, Netflix plunged 6.2% and extended this year's loss to 71%, and Meta Platforms traced down 4.2%, and Tesla declined 6.2%.

Zendesk Inc declined 7.9% to $59.84 after Morgan Stanley downgraded the stock to "equal weight" from "overweight."

S&P 500 Sinks to Bear Territory, Nasdaq Extends Losses

Barry Adams
13 Jun, 2022
New York City

Market jitters continued for the third day in a row ahead of the rate decision on Wednesday.

Futures of the S&P 500 index declined 2.4% to 3,806.50 and the Nasdaq Composite index fell 2.9% to 11,523.50.

Stocks extended losses for the third day in a row and the S&P 500 index dropped to bear market mark after the latest inflation data showed no signs of abating and the Fed has a long road ahead in catching up with inflation.

Risky assets were hit hard and bitcoin plunged 14% to $23,582 according to the price data available on CoinDesk.

Bitcoin declined for the 12 weeks in a row from its high near $49,000 in March.

Coinbase Global plunged 21.4% to $46.24 after the continued weakness in the largest cryptocurrency bitcoin.

Markets are looking ahead to interest rate decisions from several central banks this week.

The faster than expected inflation dashed hopes of peaking inflation and raised expectations that the interest rates may be raised higher-than-expected 50 basis points after a two-day meeting on Wednesday.

The Federal Reserve has signaled a 50 basis points interest rate increase at its next meeting this week and in late July.

The yen extended its year-long decline and fell to 135.20 against one dollar before recovering to close at 134.60 as the rate gap widens between the yen and the U.S. dollar.

The rupee edged to record low 77.81 on the rising worries that higher U.S. interest rates may accelerate selling by international investors.

Asian market plunged after the U.S. inflation accelerated and fueling worries of faster rate hikes. The yen dropped to a 23-year low on widening rate gap between Japan and the U.S. Indexes in China declined after Beijing reimposed stricter controls in several parts of the city.

The Nikkei index plunged 3.01% to 26,987.44, the Hang Seng index declined 3.4% to 21,067.58, and the Kospi index dropped 3.5% to 2,504.51, a 19-month low.

Market indexes in Frankfurt and Paris dropped 2% and in London declined 1.7%.

The Sensex index dropped 1,456.74 or 2.7% to 52,846.70 and the Nifty 50 index plunged 2.6% or 427.40 to 15,774.40.

The Australian markets were closed for a holiday and the New Zealand index dropped 1.9%, the largest one-day decline in four months and fell to its lowest level in two years.

The Japanese government 10-year bonds yield rose to 0.255%, a six-year high and above the cap set by the central bank, ahead of the interest rate decision by the Bank of Japan on Friday.

The business survey index of large businesses declined to -9.9 in the quarter to June compared to -7.6 in the three-month period to March.

The joint survey by the Finance Ministry and the Cabinet Office showed negative sentiment deepened among businesses after the Ukraine war dragged on and China lockdowns continued.

The sentiment in the automobile industry fell to -25.4 on the persistent global supply chain worries.

Asian Markets Plunge On Faster Rate Hike and Covid Worries

Arjun Pandit
13 Jun, 2022
New York City

Accelerating U.S. inflation data sparked a wave of selloff in Asian markets in Monday's trading.

Market indexes opened lower and remained under pressure and continued to fall in the region as indexes in Tokyo, Hong Kong, Mumbai, and Seoul sank near their lows by early afternoon.

Asian markets were also on the decline after the U.S. inflation data and rate hike worries compounded by the reimposing of stricter restrictions in parts of Shanghai and Beijing.

Chinese authorities began reimposed mass testing in Beijing and also shut down several schools after coronavirus infections began to rise.

The Nikkei index plunged 3.01% to 26,987.44, the Hang Seng index declined 3.4% to 21,067.58, and the Kospi index dropped 3.5% to 2,504.51, a 19-month low.

Market indexes in Frankfurt and Paris dropped 2% and in London declined 1.7%.

The Sensex index dropped 1,456.74 or 2.7% to 52,846.70 and the Nifty 50 index plunged 2.6% or 427.40 to 15,774.40.

The Australian markets were closed for a holiday and the New Zealand index dropped 1.9%, the largest one-day decline in four months and fell to its lowest level in two years.

The U.S. consumer price index in May soared 8,6% after rising at 8.3% in April, according to the latest data released by the U.S. Bureau of Labor Statistics on Friday.

The May consumer price inflation rose at the fastest pace since December 1981.

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy.

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%.

On a yearly basis, food prices surged 10.1%, energy prices soared 34.6%, and shelter cost rose 5.5%.

The Federal Reserve has signaled a 50-basis-points interest rate increase at its next meeting this week and in late July.

Markets are looking ahead interest rate decisions from several central banks this week.

The yen extended its year-long decline and fell to 135.20 against one dollar before recovering to close at 134.60 as the rate gap widens between the yen and the U.S. dollar.

The rupee edged lower to 77.81 on the rising worries that higher U.S. interest rates may accelerate selling by international investors.

The Japanese government 10-year bonds yield rose to 0.255%, a six-year high and above the cap set by the central bank, ahead of the interest rate decision by the Bank of Japan on Friday.

The business survey index of large businesses declined to -9.9 in the quarter to June compared to -7.6 in the three-month period to March.

The business sentiment among smaller companies improved but remained negative at -2.1 from -9.6 in the previous quarter.

The joint survey by the Finance Ministry and the Cabinet Office showed negative sentiment deepened among businesses after the Ukraine war dragged on and China lockdowns continued.

The sentiment in the automobile industry fell to -25.4 on the persistent global supply chain worries.

U.S. and European Markets Extend Weekly Losses to 6%

Barry Adams
10 Jun, 2022
New York City

Market indexes took another knock after inflation accelerated in May and escalating fuel and food prices show no signs of receding.

Traders were already nervous before the release of the inflation report this morning and hit the sell button after inflation was ahead of expectations and dashed all hopes of peaking inflation.

The S&P 500 index plunged 2.9% to 3,900.86 and the Nasdaq Composite index plunged 3.5% to 11,340.02.

In the week, the S&P 500 declined 6.1% and the Nasdaq Composite fell 6.9%.

For the year, the S&P 500 declined 18.7% and the Nasdaq Composite fell 28.4%.

Consumer prices in May rose at a faster pace as energy price surge continued in the month.

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month.

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy.

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%.

On a year basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%.

In stock trading technology, consumer goods makers, travel and entertainment stocks faced renewed selling.

Microsoft declined 3.4%, Google parent Alphabet fell 1.9%, Apple dropped 2.8%, Meta Platforms traded down 3.5%, and Amazon plunged 4.9%.

Las Vegas Sands declined 4.3%, Hyatt Hotels decreased 5.4%, Expedia Group dropped 5.4%, and Cheesecake Factory plunged 3.8%.

Uber dropped 6.3% and Lyft plunged 6.7%.

Traders also reacted to the latest earnings news and brokerage rating revisions.

Netflix Inc declined 4.4% to $184.55 after Goldman Sachs downgraded the streaming service provider's stock from "neutral" to "sell" and cut its price target to $186 from $265.

The brokerage firm cited a number of reasons including lower investor's appetite for businesses with longer-term investment, rising competition, and declining new subscriber growth prospects in the U.S.

Rent the Runway Inc jumped 7.7% but closed down 1% to $3.50 after the online style provider said fiscal 2022 first quarter surged 100% to $67.1 million and net loss shrank 63% to $42.5 million.

Active customers increased 70% to 177,200.

Stitch Fix Inc dropped 17.7% to $6.41 following a decline of 15% in previous session after the company reported fiscal 2022 third quarter revenues declined 8% to $492.9 million and net loss of $78 million or 72 cents a share.

The total number of active clients declined 5% to 3.9 million and net revenues per active clients increased 15% to $553.

Separately, the company said it has laid off about 4% of its workforce, including 15% of its salaried positions and took a one-time charge of $15 million to $20 million in the fourth quarter.

The DAX index dropped 3.08% to `13,761.08, the CAC-40 declined 2.7% to 6,187.23, and the FTSE 100 index fell 2.2% to 7,317.52.

For the week, the DAX and CAC-40 indexes declined 5.5% and the FTSE index dropped 2.8%.

In the year so far, the DAX and the CAC-40 indexes have lost 14.1% and the FTSE 100 index is down 2.8%.

Automakers and insurance companies led the losers.

Ryanair Holdings dropped 4%, International Consolidated Airlines Group declined 2%, and Wizz Air fell 3.6% on the rising prospects of labor strikes during the busy summer travel season.

Mercedes Benz declined 2.1%, BMW fell 2.6%, and Volkswagen dropped 3.2%. Renault SA fell 3.6% and Peugeot SA declined 4.2%.

Allianz SE dropped 3.6%, AXA declined 3.6%, and Prudential Plc fell 4.2%.

In Asia, markets were cautious ahead of the release of the U.S. inflation report and the reimposing of restrictions in areas of Beijing and Shanghai also raised the prospects of longer lockdowns.

The Nikkei index dropped 1.5% to 27,824.29, the Hang Seng Index declined 0.3% to 21,806.18, and the Sensex index dropped 1.8% to 54,303.44.

For the week, the Nikkei 225 index closed up 0.5%, the Hang Seng rose 2.5%, and the Sensex index fell 2.2%.

In the year so far, the Nikkei 225 declined 5.04%, the Hang Seng fell 6.3%, and the Sensex dropped 8.3%.

European Markets Drop 3% On Rising Global Inflation

Bridgette Randall
10 Jun, 2022
New York City

Selling picked up pace on European bourses after the latest U.S. inflation report showed accelerating and deepening inflation pressures.

European stocks were under pressure after the European Central Bank lifted its inflation outlook and lowered economic growth estimates.

In addition, traders were also cautious after local governments in Shanghai and Beijing reimposed some of the stringent restrictions in parts of the cities on the rising coronavirus infections.

The three leading indexes were in negative territory for the first five hours of trading and the indexes plunged after the release of the U.S. inflation data.

The indexes continued to decline for the next two hours and closed near the lows of the day.

The DAX index dropped 3.08% to `13,761.08, the CAC-40 declined 2.7% to 6,187.23, and the FTSE 100 index fell 2.2% to 7,317.52.

For the week, the DAX and CAC-40 indexes declined 5.5% and the FTSE index dropped 2.8%.

For the year so far, the DAX and the CAC-40 indexes have lost 14.1% and the FTSE 100 index is down 2.8%.

The S&P 500 index is set to close down at least 6% and extending losses in the year so-far to 19%. The Nasdaq is set to close down 7% and extend this year's losses to 28.3%.

U.S. consumer prices in May rose at a faster pace as energy price surge continued in the month.

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month.

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy.

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%.

On a year basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%.

In regional news, Dutch industrial production rose 13.7% in April after rising at 7.6% in March, the Central Bureau of Statistics said today.

The largest production increase since June 2021 was driven by a 64.5% surge in machinery productions but transportation equipment production fell 1%.

On a seasonally adjusted basis, production in April rose 5.3% from a year ago.

Automakers and insurance companies led the losers.

Ryanair Holdings dropped 4%, International Consolidated Airlines Group declined 2%, and Wizz Air fell 3.6% on the rising prospects of labor strikes during the busy summer travel season.

Mercedes Benz declined 2.1%, BMW fell 2.6%, and Volkswagen dropped 3.2%. Renault SA fell 3.6% and Peugeot SA declined 4.2%.

Allianz SE dropped 3.6%, AXA declined 3.6%, and Prudential Plc fell 4.2%.

In Asia, markets were cautious ahead of the release of the U.S. inflation report and the reimposing of restrictions in areas of Beijing and Shanghai also raised the prospects of longer lockdowns.

The Nikkei index dropped 1.5% to 27,824.29, the Hang Seng Index declined 0.3% to 21,806.18, and the Sensex index dropped 1.8% to 54,303.44.

S&P 500, Nasdaq Drop After Inflation Surges to New 4-Year High

Barry Adams
10 Jun, 2022
New York City

The selling on Wall Street accelerated after the latest reading on inflation showed no signs of easing of price increases.

The S&P 500 index plunged 20.1% to 3,938.03 and the Nasdaq Composite index plunged 2.3% to 11,481.49.

For the year, the S&P 500 has declined 17.99% and the Nasdaq Composite has fallen 27.5%.

Consumer prices in May rose at a faster pace as energy price surge continued in the month.

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month.

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy.

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%.

On a yearly basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%.

In stock trading, technology, consumer goods makers, travel and entertainment stocks faced renewed selling.

Microsoft declined 2.8%, Google parent Alphabet fell 2.4%, Apple dropped 2.7%, Meta Platforms traded down 2.7%, and Amazon plunged 3.7%.

Las Vegas Sands declined 3.4%, Hyatt Hotels decreased 2.5%, Expedia Group dropped 3.7%, and Cheesecake Factory plunged 4%.

Traders also reacted to the latest earnings news and brokerage rating revisions.

Netflix Inc declined 4.9% to $192.77 after Goldman Sachs downgraded the streaming service provider's stock from "neutral" to "sell" and cut its price target to $186 from $265.

Rent the Runway Inc jumped 7.7% to $3.80 after the online style provider said fiscal 2022 first quarter surged 100% to $67.1 million and net loss shrank 63% to $42.5 million.

Active customers increased 70% to 177,200.

Stitch Fix Inc dropped 16.04% to $6.53 following a decline of 15% in previous session after the company reported fiscal 2022 third quarter revenues declined 8% to $492.9 million and net loss of $78 million or 72 cents a share.

The style company said the total number of active clients declined 5% to 3.9 million and net revenues per active clients increased 15% to $553.

Separately, the company said it has laid off about 4% of its workforce, including 15% of its salaried positions and took a one-time charge of $15 million to $20 million in the fourth quarter.

In Europe, market indexes declined following the U.S. inflation report.

The DAX index dropped 2.3% to `13,868.70, the CAC-40 declined 2.3% to 6,210.61, and the FTSE 100 index fell 2.1% to 7,320.70

In Asia, markets were cautious ahead of the release of the U.S. inflation report and the reimposing of restrictions in areas of Beijing and Shanghai also raised the prospects of longer lockdowns.

The Nikkei index dropped 1.5% to 27,824.29, the Hang Seng Index declined 0.3% to 21,806.18, and the Sensex index dropped 1.8% to 54,303.44.

The Four-Decade High Inflation Accelerated in May

Brian Turner
10 Jun, 2022
New York City

Consumer prices in May rose at the fastest pace as the surge in energy price continued in the month.

The Consumer Price Index increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 8.6% before seasonal adjustment, faster than 8.3% in the previous month.

The all items index increased 8.6% for the 12 months ending May, the largest 12-month increase since the period ending December 1981.

The annual price increases have been accelerating since the lifting of pandemic restrictions as businesses struggle with supply chain issues and rising costs of commodities, food, and energy.

The index for all items less food and energy rose 0.6% in May, matching increase in April.

On a monthly basis, food prices rose 1.2%, energy prices surged 3.9%, and shelter prices rose 0.6%.

On a year basis, food prices surged 10.1%, energy prices 34.6%, and shelter cost rose 5.5%.

Gasoline prices in the year soared 48.7% and fuel oil prices soared 106.7%.

Cost of new vehicles rose at 1.0% from the previous month or 12.6% annually and used vehicles prices rose 1.8% and 16.1% on a monthly and annual basis.

Medical care services rose at the slowest pace of 4% in the year.

The Bureau of Labor Statistics gathers data from about 8,000 households, 23,000 retailers and about 50,000 landlords.

Shelter carries the largest weight in the index, the cost of owning or renting a home, accounts for 32.4% of all expenditures and has not increased as much as other items, despite the recent runup in home prices.

However, food accounting for about 14% of all expenditures has jumped in double digits for more than a year and transportation accounting 8% has more than doubled in two-years.

Three days ago, Treasury Secretary Janet Yellen said in her testimony before the Senate Finance Committee that the U.S. inflation to "remain high for some time."

Movers: Angi, CME Group, DocuSign, Netflix, Rent the Runway, Stitch Fix

Barry Adams
10 Jun, 2022
New York City

Angi Inc traded nearly unchanged at $5.10 after the home services listing portal said May ad and listing revenues jumped 26% in North America and declined 6% in Europe. Total revenues increased 24%.

Service requests on the portal declined 7% from a year ago.

CME Group added 1.8% to $201.50 after Atlantic Equities upgraded the exchange operator's stock to "overweight" from "neutral" and highlighted that the current price offers attractive investment opportunity and strong operating fundamentals.

DocuSign Inc plunged 25.3% to $65.21 after the online contract verification and management company reported weaker-than-expected quarterly results.

Revenues in the first quarter increased 25% to $588.7 million and net loss tripled to $27.4 million from $8.4 million a year ago. Diluted loss per share jumped to 14 cents from 4 cents a year ago.

The company had warned of slower growth after the pandemic era restrictions were lifted and return to office work changed the market environment.

Netflix Inc declined 4.9% to $192.77 after Goldman Sachs downgraded the streaming service provider's stock from "neutral" to "sell" and cut its price target to $186 from $265.

Rent the Runway Inc jumped 7.7% to $3.80 after the online style provider said fiscal 2022 first quarter surged 100% to $67.1 million and net loss shrank 63% to $42.5 million.

Active customers increased 70% to 177,200.

Stitch Fix Inc dropped 16.04% to $6.53 following a decline of 15% in previous session after the company reported fiscal 2022 third quarter revenues declined 8% to $492.9 million and net loss of $78 million or 72 cents a share.

The style company said the total number of active clients declined 5% to 3.9 million and net revenues per active clients increased 15% to $553.

Separately, the company said it has laid off about 4% of its workforce, including 15% of its salaried positions and plans to take a one-time charge of $15 million to $20 million in the fourth quarter.

Ahead of Inflation Data S&P 500 Plunges 2.5%. Nasdaq Down 2.8%

Barry Adams
09 Jun, 2022
New York City

Stock market indexes plunged ahead of key inflation data on Friday.

The S&P 500 index declined 2.4% to 4,017.82 and the Nasdaq Composite index fell 2.8% to 11,754.23.

Market indexes opened slightly lower and held below the flat line for the most part.

However, investors grew nervous ahead of the consumer price index report tomorrow and selling began in earnest in the final thirty minutes of trading.

Tech stocks, casino operators, and Chinese companies came under heavy pressure.

Meta Platforms plunged 6.5%, Microsoft declined 2%, Apple Inc fell 3.6%, and Google parent Alphabet dropped 2%.

Las Vegas Sands dropped 5.6% and MGM Resort International declined 3%.

Oil prices dipped 88 cents and closed at $121.22 but natural gas prices rose 25 cents to $8.94 a unit.

The yield on 10-year Treasury notes increased a fraction to 3.044%.

The European Central Bank said it plans to lift rates at its next meeting on July 1 and lower economic growth outlook.

After the meeting of the Governing Council, the central bank said it plans to lift rates by 25 basis points at its next meeting in July and expects additional hikes at the September meeting.

The euro declined after the announcement but managed to rebound 0.5% by mid-day trading and the yield on 10-year German Bund increased to 1.41%.

For now the main lending rate from the ECB was held at 0.00%, marginal lending rate at 0.25%, and bank deposits with the central bank earned -0.5%.

Annual consumer price inflation jumped to a 4-decade high of 8.1% in May, and rate hikes of 15 basis points are likely to have no or minimal impact on inflationary pressures.

The ECB revised higher its 2022 inflation estimate to 6.8% from the previous estimate of 5.1% and lowered economic growth estimate to 2.8% from the 3.7% estimate in March.

The central bank also lowered 2023 and 2024 growth estimates and said inflation pressures are likely to subside in the next two years but are expected to remain above its 2% target rate in 2023.

The ECB last hiked rates in 2011 and the central bank has kept deposit rates in negative territory since 2014.

Initial jobless claims in the week ending on June 4 rose more than expected and the 4-week average also climbed.

Initial claims increased 27,000 to 229,000 from the revised 222,000 claims in the prior week.

The 4-week average also edged up 8,000 to 215,000 from the previous week's revised average of 207,000.

Five Below plunged 1.38% to $133.57 after the discount retailer reported weaker than expected earnings and lowered its outlook for the second quarter and full-year.

Signet Jewelers rose 9% to $67.83 after the largest jewelry chain reported 9% increase in sales and reaffirmed its annual sales and earnings outlook.

Target Corporation fell 1.4% $154.54 after the retailer lifted its dividend despite the recent inventory challenges and weakening profit outlook.

Target declared a quarterly dividend of $1.08 per common share, a 20% increase from the prior quarterly dividend of 90 cents.

The dividend is payable Sept. 10, 2022 to shareholders of record at the close of business August 17, 2022.

Signet Jewelers Sales Jump 9%, Records $190 Million Gender Bias Settlement Charges

Scott Peters
09 Jun, 2022
New York City

Signet Jewelers, the operator of Kay, Jared, and Zales brand stores, said sales in the U.S. were nearly flat and litigation charges wiped out quarterly earnings.

Sales in the first quarter rose 8.9% to $1.8 billion on a same store sales increase of 2.5%.

Same store sales in North America declined 0.9% in the quarter but total sales increased 5.4% to $1.7 billion on higher average transaction volume and fewer transactions.

International sales surged 91.6% to $110.0 million after the lifting of pandemic restrictions allowed stores to reopen.

Gross margin was $723.7 million, or 39.4% of sales, down 80 basis points to the first quarter last year.

Selling, general, and administrative expenses were $533.1 million or 29.0% of sales, 130 basis points improvement from a year ago.

In the quarter, the company swung to a net loss of $92.1 million from net income of $129.8 million a year ago.

The company reported a loss partly reflecting a legal settlement expense of $190.0 million.

In the quarter the retailer reported diluted loss per share of $1.89 from net income per share of $2.23 a year ago.

Inventories at the end of the quarter increased $200 million to $2.2 billion largely reflecting the acquisition of Diamonds Direct in November 2021.

Diamonds Direct USA Inc is based in Charlotte, North Carolina and operates 22 stores in 13 states.

In an all cash transaction, Signet acquired Diamonds Direct for $490 million.

Cash used for operating activities were $135.5 million, a decline of $297 million from a year ago driven by inventories replenishments.

In the quarter the company repurchased 4.3 million shares at an average cost per share of $73.42 or $318.2 million of its own shares including $50 million in the previously announced accelerated repurchase agreement.

The retailer opened 14 stores and closed 13 and ended the quarter with 2,507 stores.

Litigation Charges

On June 8, 2022 the company reached a preliminary settlement of $175 million for women employees' claims arising from its pay practices and promotion policies.

The class action lawsuit filed in 2008 included 68,000 women who had worked at stores between 2004 and 2018.

About $125 million will be awarded to claimants, approximately $1,838 per person, and $50 million will be paid to attorneys of claimants.

As a result of the proposed settlement, the company recorded a pre-tax charge of $190 million in the first quarter.

The settlement charge includes the payments to the claimants and attorney fees and costs, estimated employer payroll taxes, and class administration fees.

If the agreement is approved, the company expects to fund the settlement in the third quarter of fiscal 2023.

The retailer entered in a class action legal settlement of $240 million in March 2020 filed by shareholders for not disclosing allegations covering sexual harassment and subprime loans included in the customer loan portfolio.

Guidance and Outlook

The retailer guided second quarter sales between $1.79 billion and $1.82 billion and reaffirmed full-year sales between $8.03 billion and $8.25 billion and diluted earnings per share between $12.72 and $13.47.

The company plans to pay 20 cents a share dividend on August 26, 2022 to shareholders of record on July 29, 2022

The company estimated capital expenditure in the year at $250 million.

Company and Stock

Signet Jewelers operates 2,507 diamond jewelry stores spread over 4.2 million square feet.

Of the total stores, 2,412 are located in the U.S., 94 in Canada, 335 in the U.K., 10 in Republic of Ireland, and 3 in Channel Islands.

Signet Jewelers Ltd soared 9.2% to $67.93 after the release of earnings and trimmed this year's loss to 27.3%.

The bridal sales are about half the total sales and the company is likely to benefit as the number of weddings rebound from the low of 1.3 million in 2020 to above the 2.2 million pre-pandemic annual average.

Movers: Five Below Nio, Ollie's Bargain, Skillsoft, Signet, Target

Barry Adams
09 Jun, 2022
New York City

Five Below plunged 7.8% to $126.77 after the discount retailer reported weaker than expected earnings and lowered its outlook for the second quarter and full-year.

Nio Inc dropped 7.7% to $18.81 after the electric vehicle maker reported smaller-than-expected quarterly loss and exceeded revenues estimates.

The company delivered 25,768 vehicles in the first quarter 2022, representing an increase of 28.5% from the first quarter of 2021 and an increase of 2.9% from the fourth quarter of 2021.

Quarterly loss shrank 63% to $1.83 billion and said second quarter deliveries are expected to range between 23,000 and 25,000.

The automaker guided revenues in the quarter to fall between $1,473 million and $1,591 million, an increase of approximately 10.6% to 19.4% from the same quarter a year ago.

Ollie's Bargain Outlet Holdings rose 5.2% to $56.74 after the discount retailer was upgraded to "outperform" from "sector perform" by RBC Capital Markets despite the company reporting a sharp plunge in revenues, earnings and same store sales.

Ollie's Bargain has advanced for the sixth day in a row and extended gains to 22% in the period.

Skillsoft Corp plunged 16.3% to $5.30 despite the company delivering better than expected quarterly results.

Revenues in the quarter increased 79% to $163.9 million and net loss of $21.6 million or 15 cents a share.

The education technology company guided full year fiscal 2023 booking between $790 million and $825 million.

Signet Jewelers Ltd soared 9.2% to $67.93 after the retailer of diamond jewelry said sales in the first quarter rose 8.9% to $1.8 billion on a same store sales increase of 2.5%.

Same store sales in North America declined 0.9% in the quarter.

In the quarter, the company swung to a net loss of $92.1 million from net income of $129.8 million a year ago. The company reported a loss partly reflecting a legal settlement expense of $134.5 million.

The retailer entered in a class action legal settlement in March 2020 for $240 million covering sexual harassment and subprime loans included in the customer loan portfolio.

The retailer guided second quarter sales between $1.79 billion and $1.82 billion and full-year sales between $8.03 billion and $8.25 billion and diluted earnings per share between $12.72 and $13.47.

Target Corporation jumped 0.1% $156.94 after the retailer lifted its dividend despite the recent inventory challenges and weakening profit outlook.

Target declared a quarterly dividend of $1.08 per common share, a 20% increase from the prior quarterly dividend of 90 cents.

The dividend is payable Sept. 10, 2022 to shareholders of record at the close of business August 17, 2022.

Tesla Inc jumped 2.9% to $746.93 after the electric vehicle maker was upgraded to "buy" from "hold" and the brokerage firm said that the company's "operation outlook is stronger than ever."

Separately, Tesla also said vehicles made at its Shanghai, China location jumped to 32,165 in May from 1,152 in April.

Negative Sentiment Drives S&P 500 and Nasdaq Lower

Barry Adams
09 Jun, 2022
New York City

Stocks declined after weekly jobless claims rose and the European Central Bank suggested a plan to lift rates for the first time in more than a decade.

Futures of the S&P 500 index declined 0.2% to 4,106.25 and the Nasdaq Composite index fell 0.5% to 12,552.07.

The European Central Bank said it plans to lift rates at its next meeting on July 1 and lower economic growth outlook.

After the meeting of the Governing Council, the central bank said it plans to lift rates by 25 basis points at its next meeting in July and expects additional hikes at the September meeting.

The central bank had previously guided that any rate increases will be announced only after the end of the net asset purchase program on July 1.